“The twenty-first century will not belong to the United States, Europe or China. It will be no one’s world.”
Charles A. Kupchan is Professor of International Affairs at Georgetown University and Whitney Shepardson Senior Fellow at the Council on Foreign Relations. These reflections are excerpted from the current issue of Aspenia Italia.
The global distribution of power is fast changing. Europe and the United States, which for some two centuries have together dominated the global landscape, are ceding power and influence to China, India, Brazil, and other emerging powers. The implications of this continuing redistribution of global power will be magnified by the fact that rising nations are forging their own brands of governance and capitalism, not embracing the political and economic norms associated with the “Western way.” The twenty-first century will not belong to Europe, the United States, China, or anyone else; it will be no one’s world.
As they look ahead, Western democracies thus face the prospect of a world transformed. Their global sway is on the wane. Their brand of modernity — liberal democracy, industrial capitalism, and secular nationalism — will have to compete with other political and economic models, including state capitalism in China and Russia, political Islam in the Middle East, and left-wing populism in Latin America. If the West is to succeed in adjusting to these changes and anchoring the quickening turn in global affairs, it will have to reclaim its economic health and recover its political vitality — not easy tasks when Europe is being pulled apart by its debt crisis and the United States is virtually paralyzed by partisan polarization.
THE WORLD’S CHANGING MAP OF POWER
The next few decades will bring a complete overhaul of the global pecking order. During the Cold War, the Western allies accounted for more than two-thirds of global output. Now they represent about half of output, and this figure is decreasing. As of 2010, four of the top five economies in the world were still from the developed world (the United States, Japan, Germany and France). From the developing world, only China made the grade, occupying second place. By 2050, according to Goldman Sachs, four of the top five economies will come from the developing world (China, India, Brazil, and Russia). From today’s developed world, only the United States will make the cut; it will rank second, and its economy will be about half the size of China’s.
“The next few decades will bring a complete overhaul of the global pecking order.”
This leveling in the international distribution of power is poised to unfold quite quickly. The World Bank predicts that the US dollar will lose its global dominance by 2025 as the dollar, euro, and China’s renminbi become co-equals in a “multi-currency” monetary system. Goldman Sachs projects that the collective economic output of the top four developing countries — Brazil, China, India, Russia — will match that of the G7 countries by 2032.
This reallocation of global wealth will result primarily from the rise of “the rest”, not the absolute decline of the West. Indeed, a combination of economic resilience and military superiority will keep the United States at or near the top of the pecking order for years to come. And as long as the European Union holds together, it will remain one of the world’s main centers of commerce and investment for the foreseeable future.
“History makes clear that such transitions in the distribution of global power are dangerous; they usually bring with them instability and, not infrequently, great-power war.”
Nonetheless, the West is losing the hegemonic position that it has long enjoyed. History makes clear that such transitions in the distribution of global power are dangerous; they usually bring with them instability and, not infrequently, great-power war. A defining strategic challenge of the twenty-first century will be managing this transition and ensuring that it occurs peacefully.
The West will have to adapt not just to the loss of its material primacy, but also to its diminishing ideological dominance. Rather than following the West’s path of development and obediently accepting their place in the liberal international order erected by liberal democracies after World War II, rising nations are fashioning their own versions of modernity and pushing back against the West’s ideological ambitions. Efforts to manage the coming turn in global affairs will thus take place in a world that is increasingly diverse and unwieldy.
If Western leaders remain blind to this new reality and continue to expect conformity to Western values, they will not only misunderstand emerging powers, but also alienate the many countries tired of being herded toward Western standards of governance. Developing nations are fast acquiring the economic and political wherewithal to consolidate brands of modernity that represent durable alternatives to the West’s.
THE UPSIDE OF STATE CAPITALISM
The last thirty years of Chinese development, for example, look nothing like the path followed by Europe and North America. The West’s ascent was led by its middle class, which overturned absolute monarchy, insisted on a separation of church and state, and unleashed the entrepreneurial and technological potential vital to the Industrial Revolution. In contrast, the authoritarian Chinese state has won over its middle class: its economy outperforms those of Western competitors, enriching its bourgeoisie and lifting hundreds of millions out of poverty. Moreover, in today’s fast and fluid global economy, the control afforded by state capitalism has its distinct advantages. China – in no small part because it has retained control over policy instruments abandoned by liberal states – has proved quite adept at taking advantage of globalization’s benefits while limiting its liabilities. It should be no surprise that Russia, Vietnam and others are following China’s lead.
The Middle East is similarly set to confound expectations of political conformity. Participatory politics may be arriving in the region, but most of the Muslim world recognizes no distinction between the realms of the sacred and the secular; mosque and state are inseparable, ensuring that political Islam is returning as coercive regimes fall. Indeed, a 2013 poll revealed that nearly two-thirds of Egyptians want civil law to adhere strictly to the Koran.
And Egypt is the rule, not the exception. If nothing else, the Arab Spring has shown that democratization does not equal Westernization. It is past time for Europe and the United States to rethink their longstanding alignment with the region’s secular parties.
True, rising powers like India and Brazil are more stable, secular democracies that appear to be hewing closely to the Western model. But these countries have democratized while their populations consist mainly of the urban and rural poor, not the middle class. As a result, both nations have embraced a left-wing populism wary of free markets and of representative institutions that seem to deliver benefits only to a privileged elite.
Rising democracies are also following their own paths on foreign policy. India, for example, has demonstrated pronounced ambivalence toward US efforts to make it a strategic partner. New Delhi is at odds with Washington on issues ranging from Afghanistan to climate change, and it has been deepening commercial ties with Iran just as the United States and Europe have been tightening sanctions. Standing up to the West still holds cachet in India and Brazil, one reason New Delhi and Brasília line up with Washington less than 25 percent of the time at the United Nations.
Europe and the United States have long presumed that the world’s democracies will as a matter of course ally themselves with the West; common values supposedly mean common interests. But if India and Brazil are any indication, even rising powers that are stable democracies will chart their own courses, expediting the arrival of a world that no longer plays by Western rules.
The twenty-first century will not be the first time the world’s major powers embraced quite different models of governance and commerce: during the seventeenth century, the Holy Roman Empire, Ottoman Empire, Mughal Empire, Qing Dynasty and Tokugawa Shogunate each ran its affairs according to its own distinct rules and culture. But these powers were largely self-contained; they interacted little and thus had no need to agree on a set of common rules.
This century, in contrast, will be the first time in history in which multiple versions of order and modernity coexist in an interconnected world; no longer will the West anchor globalization. Multiple power centers, and the competing models they represent, will vie on a more level playing field. Effective global governance will require forging common ground amid an equalizing distribution of power and rising ideological diversity.
THE PRICE OF GLOBALIZATION
If the West is to have the political wherewithal to effectively manage this tectonic shift in global politics, it will have to recover from the crisis of democratic governance plaguing both sides of the Atlantic. At stake is not just the ability of Europe and the United States to shepherd this unfolding transition, but also their capacity to ensure that a liberal and democratic version of modernity retains its global allure as it competes with alternative models.
“The crisis of governability, although it has multiple causes, is first and foremost the consequence of globalization’s socioeconomic impact on the world’s leading democracies. Globalization may be fueling the rise of the rest, but it is also taking a toll on the West.”
It is not coincidental that Europe and the United States are simultaneously experiencing political dysfunction. This crisis of governability, although it has multiple causes, is first and foremost the consequence of globalization’s socioeconomic impact on the world’s leading democracies. Globalization may be fueling the rise of the rest, but it is also taking a toll on the West.
De-industrialization and outsourcing, global trade and fiscal imbalances, excess capital and credit and asset bubbles — these effects of globalization are confronting democratic electorates with hardships and insecurity not experienced for generations. The distress stemming from the economic crisis that began in 2008 is particularly acute, but the underlying problems began much earlier. For the better part of two decades, middle-class wages in the world’s leading democracies have been stagnant, and economic inequality has been rising sharply as globalization handsomely rewards its winners — but leaves its many losers behind.
These trends are not temporary by-products of the business cycle. Nor do insufficient regulation of the financial sector, tax cuts amid expensive wars, or other errant policies represent the main cause. Instead, stagnant wages and rising inequality are primarily a consequence of the integration of billions of low-wage workers into the global economy and increases in productivity stemming from the application of information technology to the manufacturing sector. Global capacity therefore far outstrips demand, hurting workers in the high-wage economies of the industrialized West.
THE TECHNOLOGICAL REVOLUTION
Western democracies are also being buffeted by the socioeconomic effects of digital technology and the information revolution. Particularly in the United States, the proliferation of the Internet and cable news channels is fueling ideological polarization, not more informed and deliberative debate. The rising cost of media-driven campaigns increases the influence wielded by donors, giving an unfair advantage to special interests and angering the broader electorate. Partisan mobilization is reinforcing regional cleavages, widening the ideological distance between America’s liberal northeast and the more conservative south. The same factors have been contributing to strained relations between Belgium’s French-speaking Walloons and Dutch-speaking Flemish, and fueling calls for more autonomy among Spain’s headstrong regions.
Voters confronted with economic duress, social dislocation, and political division look to their elected representatives for help. But just as globalization is fueling this pressing demand for responsive governance, it is also ensuring that its provision is in desperately short supply. For three main reasons, governments in the industrialized West have entered a period of pronounced ineffectiveness.
“Just as globalization is fueling this pressing demand for responsive governance, it is also ensuring that its provision is in desperately short supply.”
First, globalization has made many of the traditional policy tools used by liberal democracies much blunter instruments. Washington has regularly turned to fiscal and monetary policy to modulate economic performance. But in the midst of global competition and unprecedented debt, the US economy seems all but immune to injections of stimulus spending or to the Federal Reserve’s moves on interest rates. The scope and speed of international markets mean that decisions and developments elsewhere — Beijing’s intransigence on the value of the renminbi, an increase in the quality of Hyundai’s latest models, Europe’s sluggish response to its financial crisis, the actions of investors and ratings agencies — outweigh decisions made in Washington. Europe’s democracies too long relied on monetary policy to adjust to fluctuations in national economic performance which they can no longer do since joining the eurozone. In a globalized world, democracies simply have fewer effective policy tools at their disposal and therefore less control over outcomes.
Second, many of the problems that Western electorates are asking their governments to solve require a level of international cooperation that is unattainable. The shifts of power from the West to the rest means that there are many new cooks in the kitchen today; effective action no longer rests primarily on collaboration among like-minded democracies. Instead, it depends on cooperation among a much larger and more diverse circle of states. Europe and the United States now look to the G20, not the cozy G7, to rebalance the international economy. But consensus is elusive among nations that are at different stages of development and embrace divergent approaches to economic governance. Challenges like curbing global warming or ending the bloodshed in Syria depend on a collective effort that is well beyond reach.
Third, democracies can be nimble and responsive when their electorates are content and when they enjoy a consensus born of rising expectations, but they are clumsy and sluggish when their citizens are downcast and divided. Moreover, democracies are very good at distributing benefits, but appear to be poorly suited when it comes to apportioning sacrifice. The policy challenges facing the United States and Europe are difficult enough on their own merits; they become all but insurmountable when governments face distrustful publics, legislative gridlock, and special interests vying for shrinking resources. The failure of democracies to deliver effective policies only makes their electorates more disillusioned, leaving their governments more vulnerable and hapless. This self-reinforcing cycle is producing an ever-widening chasm between the demand for good governance and its supply.